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Capital Dynamics last month launched a dedicated private credit asset management business, tapping two Credit Suisse veterans to head up the group. Jens Ernberg and Thomas Hall will co-lead the new private credit business, based out of the New York office.

Ernberg and Hall each bring close to 20 years of industry experience in syndicated and private credit. Prior to joining Capital Dynamics, they worked together for 10 years at Credit Suisse, where they started the middle market direct lending business. At Credit Suisse, they originated over $2 billion in private debt across more than 50 transactions, according to Capital Dynamics.

Now leading Capital Dynamics’ Private Credit Asset Management business, they plan to originate and invest in private debt transactions for middle market companies owned or controlled by private equity sponsors. Capital Dynamics has relationships with over 500 sponsors.

Specifically, Ernberg and Hall intend to “source senior secured loans, focusing on first-lien, unitranche, and second-lien facilities,” according to Hall. While the private credit business will “have the flexibility to consider mezzanine and equity co-investment opportunities, the focus is on senior secured floating rate debt.” They are targeting “lower middle market companies with EBITDA ranging from $7.5 million, on the lower end, to $50 million.”

The target fund size will be around $500 million, according to sources.

The lower middle market space has been extremely competitive in recent years due to record levels of capital raised for the asset class, resulting in increased amounts of capital chasing relatively few deals. In today’s issuer friendly market, covenant-lite structures prevalent in the broadly syndicated and upper middle markets have been making their way into the traditional and lower middle markets, posing an interesting situation for the direct lending space.

“Cov-lite structures have not gotten into transactions for companies with EBITDA in the teens,” Ernberg said. “Around the $25 million EBITDA business—you are seeing cov-lite structures go there, even though a direct lender may win the transaction versus an arranger agent that is seeking to syndicate the facility. … Most lenders seem to be holding a hard line on meaningful covenants for businesses under the $25 million in EBITDA range.”

Despite the competitive industry, Ernberg and Hall posit that what differentiates their private credit business is “the close relationships with private equity general partners and the scale of the platform with $28 billion of assets under management or advisement.” — Shivan Bhavnani

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Caisse de dépôt et placement du Québec (CDPQ) is continuing its push into the U.S. private debt sector with the hire of Robert Hetu, who will lead CDPQ’s efforts in that market.

Hetu joined CDPQ in June from Credit Suisse, where he was a managing director in the investment banking department, leading the corporate lending team. Prior to CS Hetu was a senior manager in structured finance at Societe Generale in Montreal. He will be involved with sourcing U.S. private debt opportunities.

In addition to Hetu, CDPQ will hire to expand their private debt efforts in the next year, in Montreal and London. The long-term vision is to expand private debt efforts across the Atlantic, into Europe. CDPQ’s credit strategy is separated into four areas: corporate credit, specialty finance, real estate, and sovereign credit. Private debt, across these four areas, makes up $32.4 billion of the $66.7 billion fixed income portfolio, according to the company.

Jim McMullan, senior vice president in charge of the corporate credit team at CDPQ, explains that the gradual push toward leveraged finance is “not a revolution, it’s an evolution” motivated by “higher returns for [their] clients with the specter of higher interest rates.” CDPQ’s private debt strategy focuses on the upper middle market.

While there is no firm investment criteria concerning company size, the firm “focuses on more sizeable investments of $100+ million positions in a single investment,” according to McMullan, who stresses that CDPQ “wants to [work] with partners versus being the sole underwriter,” and aims to invest across the capital structure. As an example, McMullan referenced CDPQ’s $1.9 billion investment to support SNC-Lavalin’s acquisition of WS Atkins. The firm provided $1.5 billion in debt and $400 million in equity.

“The push towards leveraged finance opportunities is more people-intensive,” McMullan says. “Historically, there have been around 10 to 15 people on the corporate credit team, and we expect within the next year to be around 20.” — Shivan Bhavnani

Värde Partners has hired Aneek Mamik to originate debt to middle-market companies. He started in September, and is based in New York.

He will be North American head of specialty finance, and a team of specialty finance employees will report to him. Currently, Mamik has two direct reports, and Värde Partners is planning to hire 2–3 more for this team.

Mamik reports to Rick Noel, head of global specialty finance at Värde Partners.

Mamik joined from GE Capital, where he worked in various M&A roles, most recently as head of mergers and acquisitions where he led the sale of more than $100 billion in assets.

Mamik started his career at GE’s Australian consumer finance platform, which was acquired by Värde Partners and re-branded as Latitude Financial Services.

Craig most recently worked at H.I.G. Capital, where he sourced and managed investments, including distressed buyouts and add-on acquisitions. He previously worked at Quad-C Management and Blackstone Group.

Hidden Harbor Capital Partners, based in Fort Lauderdale, Fla., targets companies generating annual revenue of $50–500 million and EBITDA up to $25 million for control investments. The firm’s co-founders are John Caple and David Block. — Abby Latour

He is based in Los Angeles. He joined the firm last month as director.

Chung joined from THL Credit’s Direct Lending platform.

Previously, Chung worked at Los Angeles–based investment bank Libra Securities, on private placements and M&A transactions. He also was part of the corporate finance department of FTI Consulting and worked in the assurance and advisory practice of Ernst & Young.

Dan McCready will become chief investment officer of NewStar Financial, replacing Peter Schmidt-Fellner, who is retiring.

McCready had been chief credit officer of NewStar, which he joined in March 2013 for that role. He has led NewStar’s leveraged finance credit team. Prior to NewStar, McCready was chief credit officer at CIT Corporate Finance. He also worked at GE Capital, CIBC World Capital Markets, Bankers Trust Company, and Bank of America.

Schmidt-Fellner was a founder of NewStar, and had been chief investment officer since the company’s inception in 2004. He will leave NewStar’s board, but remain an external advisor.

NewStar Financial, based in Boston, is a commercial finance company with a middle market direct lending business and asset management. — Abby Latour

TPG is calling to end an ineffective investment advisory agreement between TICC Capital and TICC Management. TPG says TICC Capital shares have grossly underperformed the S&P 500 and the BDC Composite Index since TICC Capital’s IPO in 2003, driven by a 57% decline in NAV. In the meantime, TICC has paid fees of over $140 million to its external adviser and management.

“Do not be fooled! These payments are not comprised solely of investment returns; stockholders are being paid back in part with their own money,” the letter to TICC Capital shareholders said. “More importantly, this strategy has unfortunately resulted in almost irreversible value destruction of NAV per share that will only continue without quick and decisive action.”

TICC Capital has countered with its own board nominee, Tonia Pankopf, who is up for re-election this year. In a letter to its shareholders yesterday, TICC Capital sought support from shareholders to vote in favor of Pankopf and reject TPG Specialty’s plan to terminate its investment advisory agreement with TICC Management.

TICC Capital’s executive officers and directors together hold 5.7% of common stock, the proxy statement filed on July 12 showed. Ahead of the previous shareholder meeting, the board owned 1.8% of common stock, a proxy filed in April 2015 showed.

TICC Capital has also been fighting on another front. NexPoint Advisors, an affiliate of Highland Capital Management, submitted a proposal to cut fees and invest in TICC Capital. In the letter yesterday, TICC Capital told shareholders not to support any potential proposal from NexPoint.

TPG Specialty Lending’s investment portfolio reflects its ongoing interest in TICC. As of March 31, TPG owned 1.6 million TICC shares, representing 0.9% of its portfolio.

TPG has repeatedly said that TICC’s external manager has failed the BDC and, given the chance, TPG could improve returns for shareholders.

“We remain committed to affecting change at TICC,” co-CEO and Chairman Josh Easterly said in an earnings call in May. — Abby Latour

David DeMilt joined the corporate development team at investment manager Z Capital Group, covering North American investors.

He reports to CEO and founder James Zenni, and will be based in New York. DeMilt joins as managing director.

Previously, DeMilt was a senior vice president at Oaktree Capital Management, where he developed and managed middle-market institutional investor relationships in the eastern U.S., according to his LinkedIn profile. He has worked at Oaktree Capital since January 2012.

DeMilt has also worked at Goldman Sachs, Fitch Ratings, CIBC, and HSBC in various private equity and credit strategy roles. — Abby Latour

Citi have announced that Amit Raja has become Head of EMEA High-Yield Trading, in addition to his current responsibilities as Global Head of Distressed Trading and EMEA Head of Par Loan Trading, effective immediately.

This follows news that David Cohen, the now previous Head of EMEA Flow Credit Trading, will be leaving Citi. To ensure continuity, Cohen will continue to manage the investment-grade trading desk until the end of June, and is involved in the succession process. Cohen joined Citi in New York in 2010. — Luke Millar

This story first appeared onwww.lcdcomps.com, LCD’s subscription site offering complete news, analysis and data covering the global leveraged loan and high yield bond markets. You can learn more about LCDhere.